Purpose: The 2003 legislature passed a fallen heroes'
survivor benefit bill (SB 5100; codified in chapter 32, Laws
of 2003). This bill provides that pension payments to
qualifying beneficiaries of public safety officers killed in
the line of duty would not be subject to federal income tax,
as provided in federal law. The Department of Retirement
Systems' (DRS) new WAC implements the legislation.

TAXES AND FEESNEW SECTIONWAC 415-02-700
Are fallen heroes' survivor benefits
nontaxable?
(1) What is the fallen heroes tax exemption? The
department makes survivor benefit annuity payments to
qualified survivor beneficiaries of public safety officers
killed in the line of duty. All or part of the annuity
benefit paid may be nontaxable under applicable federal law1.
Lump sum payments do not qualify for nontaxable treatment
under this provision of law.

(a) Who is covered? Deceased public safety officers who
were members of the public employees' retirement system
(PERS), the law enforcement officers' and fire fighters'
retirement system (LEOFF), or the Washington state patrol
retirement system (WSPRS). If the deceased officer was a
member of another plan, please contact the department or your
tax advisor to discuss the matter.

(b) What time period is covered?

MEMBER'S DATE OF DEATH

SURVIVOR BENEFIT
PAYMENT DATE

On or after January 1, 1997

On or after January 1, 1997

On or before December 31,
1996

On or after January 1, 2002

(2) Can I rely on the department's determination of
whether the payments are nontaxable? No.

(a) The department does not guarantee that payments
should or should not be designated as exempt from federal
income tax.

(b) The department does not guarantee that it was correct
in withholding or not withholding taxes from survivor benefit
payments to you.

(c) The department does not:

(i) Represent or guarantee that any particular federal or
state income, payroll, personal property or other tax
consequence will occur because of its nontaxable
determination; or

(ii) Assume any liability for your compliance with the
Internal Revenue Code.

(d) You should consult with your own tax advisor
regarding all questions of federal or state income, payroll,
personal property or other tax consequences regarding any
payments you receive from the department.

(3) How will the department determine whether to withhold
or not withhold from your survivor benefit annuity payment for
income tax purposes?

(a) If you receive survivor benefit annuity payments
because of the death of a public safety officer killed in the
line of duty, and you are the public safety officer's spouse,
ex-spouse, or child, the department will not withhold taxes on
the portion of your survivor benefit payments attributable to
the officer's service as a public safety officer.

(b) The department will compare the service credits
associated with the member's employment as a public safety
officer to the member's overall service credit to determine
the portion of the survivor benefit payment that qualifies.

(c) Examples: In the following examples, assume that the
plan administrator has determined that the death of the member
qualifies under the fallen heroes tax exemption provision.
Assume that the monthly survivor benefit payable is $2000.

Example 1. Joe was employed as a law enforcement
officer. He spent his entire career in law enforcement from
July 1, 1976, until his death on June 10, 2003 (324 months).

Total service credit = 324 months

Service credit as public safety officer = 324 months

324 / 324 = 1.0

1.0 x $2,000 = $2,000

$2,000 is not subject to withholding

Example 2. Brian was employed as a research analyst for
a state agency from July 1, 1976, to May 30, 1995 (227 months
service credit). He was employed in a public safety officer
position for another state agency from June 1, 1995, until his
death on June 10, 2003 (97 months service credit).

Total service credit = 324 months

Service credit as public safety officer = 97 months

97 / 324 = .299383

.299383 x $2,000 = $598.77

$598.77 is not subject to withholding

Example 3. Susan was hired on July 1, 1976, as a
research analyst for a state agency. She terminated that
employment on May 30, 1995 (227 months service credit). Susan
was hired into a public safety officer position on June 1,
2003, for another state agency. She died on June 4, 2003.

Total service credit = 227.25 months

Service credit as public safety officer = .25 months

.25 / 227.25 = .001100

.001100 x $2,000 = $2.20

$2.20 is not subject to withholding

(d) What are the exceptions? Subsection (3)(a) of this
section shall not apply with respect to the death of any
public safety officer if:

(i) The death was caused by the intentional misconduct of
the officer or by the officer's intention to bring about his
or her own death;

(ii) The officer was voluntarily intoxicated at the time
of death;

(iii) The officer was performing his or her duties in a
grossly negligent manner at the time of death; or

(iv) The payment is to an individual whose actions were a
substantial contributing factor to the death of the officer.

(4) Who will decide whether to withhold money for income
tax from your survivor benefit payments?

(a) The plan administrator will make the decision.

(b) If you disagree with the plan administrator's
decision, you may petition for review under chapter 415-04 WAC.

(5) What types of evidence will the department use in
making the decision regarding whether to withhold taxes from
the survivor payments?

(a) Cause of death stated on the certified death
certificate;

(b) Facts surrounding the public safety officer's death;

(c) The deceased public safety officer's job description;

(d) The deceased's membership records;

(e) Materials that the survivor submits for
consideration; and

(f) Any other relevant evidence.

(6) Examples:

(a) Police officer: Charles is a police officer who
works for a police department in a large Washington city. He
receives a call to report to duty because a riot has started
downtown. Charles drives to the riot scene and is killed
getting out of his car from a bullet fired by a rioter. The
department will not withhold taxes on survivor benefit
payments.

(b) Fire fighter: Elaine is a fire fighter who attends a
barbecue party on the Fourth of July. During the party, the
barbecue falls over and the garage catches on fire. Elaine
grabs a hose and puts out the fire, but dies from smoke
inhalation in the process. The department would review the
evidence and circumstances to determine whether Elaine would
be considered to be "on duty" at the time of her death. If
Elaine was not on duty, the department will withhold taxes on
survivor benefit payments.

(c) Park ranger: Bobbi is a park ranger employed by the
state parks and recreation commission. Her job duties include
administration, development, maintenance, and visitor
services, in addition to law enforcement, within a state park
or park area. She is required to have knowledge of fire
prevention and suppression methods and equipment. Although
Bobbi is commissioned to enforce laws, her principal job
functions do not include criminal law enforcement or crime
control. The department would withhold taxes on payments to
her survivors unless Bobbi was actually engaged in crime
control, enforcement of criminal law, or fire suppression at
the time of her death.

(a) Chaplain - any individual serving as an officially
recognized or designated member of a legally organized fire
department or legally organized police department, or an
officially recognized or designated public employee of a
legally organized fire or police department who was responding
to a fire, rescue, or police emergency.

(b) Child - any natural, illegitimate, adopted, or
posthumous child or stepchild of a deceased public safety
officer who, at the time of the public safety officer's death,
is:

(i) Eighteen years of age or under;

(ii) Over eighteen years of age and a student as defined
in Section 8101 of Title 5, United States Code; or

(iii) Over eighteen years of age and incapable of
self-support because of physical or mental disability;

(c) Fire fighter - an individual serving as an officially
recognized or designated member of a legally organized fire
department and an officially recognized or designated public
employee member of a rescue squad or ambulance crew.

(d) Intoxication - a disturbance of mental or physical
faculties resulting from the introduction of alcohol into the
body as evidenced by:

(i) A postmortem blood alcohol level of .20 per centum or
greater;

(ii) A postmortem blood alcohol level of at least .10 per
centum but less than .20 per centum unless the department
receives convincing evidence that the public safety officer
was not acting in an intoxicated manner immediately prior to
his death; or

(iii) Resulting from drugs or other substances in the
body.

(e) Law enforcement officer - an individual involved in
crime and juvenile delinquency control or reduction, or
enforcement of the laws, including, but not limited to,
police, corrections, probation, parole, and judicial officers.

(f) Line of duty means:

(i) Any action which an officer whose primary function is
crime control or reduction, enforcement of the criminal law,
or suppression of fires is obligated or authorized by rule,
regulations, condition of employment or service, or law to
perform, including those social, ceremonial, or athletic
functions to which the officer is assigned, or for which the
officer is compensated, by the public agency he or she serves.
For other officers, "line of duty" means any action the
officer is so obligated or authorized to perform in the course
of controlling or reducing crime, enforcing the criminal law,
or suppressing fires; and

(ii) Any action which an officially recognized or
designated public employee member of a rescue squad or
ambulance crew is obligated or authorized by rule, regulation,
condition of employment or service, or law to perform.

(g) Public agency - any unit of government that meets the
definition of "employer" in any retirement plan that the
department administers.

(h) Public safety officer:

(i) Regardless of full-time or part-time status, an
individual serving a public agency in an official capacity as
a law enforcement officer, fire fighter, chaplain, or member
of a rescue squad or ambulance crew; or

(ii) An individual who is performing official duties in
cooperation with the Federal Emergency Management Agency in an
area, if those official duties:

(A) Are related to a major disaster or emergency that has
been, or is later, declared to exist with respect to the area
under the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5121 et seq.); and

(B) Are determined by the head of the agency to be
hazardous duties.

(i) Rescue - the provision of first response emergency
medical treatment, transportation of persons in medical
distress and under emergency conditions to medical care
facilities, or search and rescue assistance in locating and
extracting from danger persons lost, missing, or in imminent
danger of bodily harm.

These definitions duplicate, as closely as possible, those in 42 USCS § 3796b (2003), the applicable federal
definition section. Provisions not applicable to any plans administered by the department have been
deleted.